Tuesday, 18 January 2011

Minimum pricing

Plans for a minimum price for alcohol in England and Wales are to be announced by ministers. Shops and bars will be prevented from selling drinks for less than the tax they pay on them.

This blog has always maintained that supermarkets selling alcohol below cost-price is a myth dreamt up by the temperance lobby to feed the tabloid hysteria over binge-drinking. I have looked far and wide for examples of below-cost selling happening in practice and—aside from a few products being discounted because they're approaching their 'best before' date—have never found any.

It doesn't take a rocket scientist to work out why a business would choose not to sell something at less than the price it was bought at...

Richard Dodd, from the British Retail Consortium, told BBC Breakfast that supermarkets were being unfairly demonised.

"Supermarkets believe in responsible drinking too, and they do an enormous amount to achieve that, in terms of know-your-limits unit labelling and preventing underage purchases of alcohol, but there's an awful lot of nonsense talked about this idea of below-cost selling.

"Because, if you just stop and think about it for a minute, no business could survive - let alone thrive - if it was routinely selling large amounts of product at less than it was actually paying for it."

Supermarkets "luring in" unwitting customers with below-cost alcohol is as much of a scare story as the 'alcohol is cheaper than water' myth. Inevitably, then, banning the practice is going to have no effect. And now, after years of building up this canard, the temperance lobby suddenly agrees.

Prof Ian Gilmore, of the Royal College of Physicians, said in practice it was a "small step" with "no effect at all on the health of this nation".

On the radio this morning, Gilmore (who is the chairman of the Alcohol Health Alliance), made this admission:

"If you go round the supermarket shops today, even where they're heavily discounted, they will not fall below this level."

Accusing the government of not going far enough is an iron rule for campaigners of any hue (the alternative would mean packing up and finding more useful employment). It should be no surprise, then, that the temperance lobby is expressing dissatisfaction at today's news. In truth, they have got what they wanted for now. The government has introduced a minimum price of sorts and an important precedent has been set. As Dick Puddlecote says in a suitably angry post:

This isn't the be all and end all of anti-alcohol policy. It's just the first step on a long temperance journey towards alcohol denormalisation, chillingly alluded to in this short and seemingly innocuous paragraph.

They say banning shops and bars from selling drinks for less than the tax paid on them will cut crime and set a "base price" for the first time.

Yes, that's right. For the first time.

And this is precisely what it is. It's a precedent; a potential enabling act for eternal government control of the price of alcohol.

With the principle now in place that the state has the right to decide how much a product should cost, there will now be a continuous campaign to create a minimum price per unit. Once that it done, every scare story about 'Booze Britain'—whether true or not—will be accompanied with a squeal from fake charities to increase that minimum price. Forever.

7 comments:

It's interesting that, while this was always described before as "a ban on below-cost selling" it is now being spun as "minimum pricing".

I've often made the point before that, despite the scaremongering, the actual proportion of alcohol being sold below invoice price by supermarkets is minimal. I'd be amazed if it was over 1% of total alcohol units sold.

Spirits are taxed more highly per unit than beer or wine because of the lower production cost, so I can well believe the £10.71 a litre figure for vodka, which is about 27p a unit. It's a bit late to be researching the details of the alcohol taxation system but I think that's roughly correct.

The tax on Tesco Value lager will be rather less than 38p a can, I think.

Found it now – spirits are taxed at the rate of £23.80 per litre of pure alcohol. So the duty on a litre of 37.5% vodka is £8.93, which becomes £10.71 once VAT at 20% is added. The minimum price for a litre of 40% whisky would be £11.42.

About Me

Writer and researcher at the Institute of Economic Affairs. Blogging in a personal capacity.
Author of Selfishness, Greed and Capitalism (2015), The Art of Suppression (2011), The Spirit Level Delusion (2010) and Velvet Glove, Iron Fist (2009).

"Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience."